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Research: Healthcare
BioLargo stated that it expects Clyra Medical (of which it owns a 48% interest) and its Clyraguard product to be a major driver of growth in the coming periods. Clyra Medical signed an agreement with a major national distributor in July, with the first substantial sales to occur in Q320. Clyra Medical reported a small revenue ($21,000) for Q220, reflecting one week of sales from a previous test marketing run.
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BioLargo |
Clyraguard to be a major growth driver
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27 August 2020 |
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BioLargo is a research client of Edison Investment Research Limited |
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BioLargo stated that it expects Clyra Medical (of which it owns a 48% interest) and its Clyraguard product to be a major driver of growth in the coming periods. Clyra Medical signed an agreement with a major national distributor in July, with the first substantial sales to occur in Q320. Clyra Medical reported a small revenue ($21,000) for Q220, reflecting one week of sales from a previous test marketing run.
Sales continue to be affected by COVID-19
BioLargo reported revenue of $426,000 for Q220, which included $299,000 from Odor-No-More (ONM) and $160,000 from BLEST (as well as the Clyra Medical sales and less $62,000 from intracompany sales). Revenue from ONM and BLEST is down slightly on a year-on-year basis ($315,000 and $241,000 in 2019 respectively), and the company cited COVID-19 as causing reduced sales. However, the company is still receiving work orders, and expects revenue to rebound once shelter-in-place orders are lifted. Moreover, the company has been expanding the menu of services offered at ONM (and rebranded as ONM Environmental Products and Services), which we believe should also help sales.
Major milestones in water purification
The company’s ‘Advanced Oxidation System’ (AOS) water purifier recently received its first commercial contract, an expansion of the Alberta poultry processing pilot, and it is expected to produce $500,000 over the life of the project. Additionally, the company recently started a new municipal wastewater pilot in Montreal, which will install the AOS as well as a new device, the ‘Aqueous Electrostatic Concentrator’ (AEC). The AEC is designed to eliminate poly-fluoroalkyl substances (PFAS) from a water supply and the prototype can eliminate 99% of PFAS. PFAS are notoriously hard to eliminate from the environment, and not adequately addressed with existing water treatment methodologies.
Cleaning up the balance sheet
BioLargo has recently been engaged in an effort to improve its net cash position through the reduction of its outstanding debt through the issuance of new stock. It started the year with $4.8m in debt of which $4.0m was convertible notes and reported in August 2020 that it had converted $3.5m so far this year. The company has issued approximately 47m shares associated with these conversions and other equity issuances since the end of 2019. The company stated that after these conversions, it will have an estimated gross debt load of $2.2m, of which $1.0m is held by the partially held subsidiary Clyra Medical.
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Historical financials
Source: BioLargo reports |
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Research: Healthcare
RedHill booked $20.9m in Q220 sales (vs $1.6m a year ago) with Movantik accounting for $20.0m. Q220 was the first full quarter of RedHill promoting Movantik for opioid-induced constipation (acquired from AstraZeneca on 1 April 2020). AstraZeneca reported sales of $96m in FY19. It is worth noting that Q220 saw the peak of COVID-19 lockdowns in the US, so promotional activities were limited. With lifting of restrictions, RedHill is also ramping up the promotion of its recently launched Talicia. The COVID-19 programme is progressing well with two clinical trials up and running. The new deal with Cosmo expands the collaboration with this partner and involves co-development of two assets. Our valuation of RedHill remains slightly changed at $601m or $16.2 per ADS.